Key points:
- Omega Diagnostics shares rallied 18.4% on the sale of its CD4 business.
- The company will no longer operate in the Global Health division from today.
- The diagnostics firm will now focus on its health and nutrition business.
The Omega Diagnostics Group Plc (LON: ODX) share price rallied 18.4% after announcing that it had completed the sale of its CD4 business to Accubio Limited. The company sold the unit for £6.1 million cash, before including transaction costs.
Investors cheered the announcement, given that the CD4 division was a loss-making entity that dragged the company’s overall earnings lower. The deal was first mooted in March 2022, when Accubio acquired Omega Diagnostics’ Alva manufacturing site on 7 March 2022.
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Since then, Accubio has been providing manufacturing services for Omega’s CD4 business. Finally, Accubio made an offer for the entire business on 4 July 2022, which was accepted by Omega’s board and was finalised today.
The company reiterated its belief that the CD4 business, which manufactures and distributes VISITECT® CD4 and VISITECT® CD4 Advanced Disease tests, would thrive under new owners with the capacity to make further investments in expanding production and the development of new products.
Omega Diagnostics added that the CD4 business contributed significantly to the £2.3 million pretax loss recorded in the year ended 31 March 2021 within its Global Health division. The division further contributed to the £2.9 million pretax loss in the same division during the six months ended 30 September 2021.
The medical diagnostics company will receive an initial amount of £1.1 million for acquiring fixed assets and inventory, with a further £4.0 million expected after the transfer of intellectual property to the new owners.
Omega Diagnostics will no longer operate in the Global Health division after withdrawing from the COVID-19 market in March this year.
Jag Grewal, Omega Diagnostics CEO, commented: “We are extremely pleased to complete the sale of our CD4 business to Accubio, with whom we have worked closely with since securing the sale of our Alva site in March this year. The disposal of our CD4 business completes the first phase of our turnaround plan, addressing the unsustainable cost base in Scotland and divesting our loss-making businesses. The sale now allows us to focus all our efforts on the profitable and cash generative Health and Nutrition division.”
Omega Diagnostics share price.
The Omega Diagnostics share price rallied 18.43% to trade at 3.79p, rising from Tuesday’s closing price of 3.20p.
